Along with the development of mass production of goods, the distribution of goods from providers to consumers has become well established. Suppliers have developed at various levels in the supply chain, including the producer (e.g., a grower, rancher, or farmer in the food area), the manufacturer, and the distributor, all working together to move goods to the retailer and then the consumer. Only to a limited extent do producers and manufacturers now sell products directly to consumers. Typically, most products are delivered via distributors which traditionally act as intermediaries between manufacturers and retailers (or businesses) to aggregate large volumes of low margin goods in order to minimize unit transportation costs. Distributors typically operate on very narrow profit margins, carefully balancing product selection, availability, price, volume, and geographic area as needed to achieve a level of profitability that can sustain service delivery to the intended target market or markets. The improvements in production and distribution have enabled yesterday's small corner retail shop to evolve into today's huge mass merchandising retailer that offers products from literally thousands of vendors.
With the advent of the computer and an increasingly large portion of the populace using the Internet and other communications technologies, consumer purchasing has also evolved to include direct purchasing of products or services from or through remote vendors such as Amazon™, E-Bay™, Yahoo™, Expedia™, and Travelocity™. Products are often shipped through third party delivery companies, such as United Parcel Service™ or Federal Express™. Services are provided through on-line interfaces to other systems, including reservation systems. Although Internet sales of products have grown dramatically and continue to grow at high rates, heretofore consumers have pre-dominantly utilized the Internet to order either products such as books and specialty products, or to arrange for services such as airline reservations or other travel arrangements. Internet sales to date have not evolved to the stage where large quantities of consumer packaged goods such as groceries, cleaning supplies, dairy, or health & beauty aids are purchased. Nor have Internet sales expanded significantly in food & beverage areas such as meat, beer, liquor or wine, seafood, or produce (e.g., fruits and vegetables). Heretofore most products have been provided to customers by retailers, including highly efficient mass merchandisers such as Wal-Mart or Target, or large warehouse outlets such as Sam's Club or CostCo. There are several reasons for this, as discussed below.
Internet sales have not expanded significantly in the aforementioned areas because Internet sales currently include a number of deterrents to the purchaser and the supplier. Remote suppliers will often levy a shipping charge for transporting products which can constitute a significant proportion of the total value of the transaction, or simply be a deterrent to purchases due to shipping being an explicit additional cost. Another constraint is the lack of suitable information and logistical arrangements for remote suppliers to deliver products in larger volume to consumers. A further constraint is the lack of an efficient, intuitive, and effective technology and system for offering multiple products from distributors, manufacturers, or producers which may be readily incorporated into bulk shipments to consumers. A further constraint is the fact that distributors will typically sell products by the case, whereas consumers will seek to purchase products for less than case quantities, or even single unit increments. A further constraint are laws that prohibit interstate sales of certain products, such as, for example, wine, beer, liquor, and the like.
Buying clubs (also known as coops, food coops, food buying clubs, buyer groups, buying groups, groups, and the like) are an alternative distribution mode utilized for remote buying of consumer goods, most prevalently practiced in the sourcing and purchasing of organic foods. Buying clubs are usually formed to acquire products directly from suppliers (typically distributors) at better prices than are generally available through retail outlets and/or to purchase products that are not otherwise available through local retailers.
Buying clubs typically comprise a group of consumers who become members, and may include five to twenty or more households. A buying club, also referred to as a customer, consists of members who jointly purchase products from suppliers and receive deliveries and make pickups of products within a common local area. Most typically one member will handle the bulk of the duties, and such person is referred to herein as the Buyer Coordinator, who is also most typically a member of the club. Club members are generally located within a certain geographical, or physical, proximity to each other, which allows for a central pickup point to be identified that is reasonably convenient for all members. Typically club members include larger families with more than one or two children. Thus members who manage households tend to be extremely busy and also tend to operate on more limited financial means (saving money is one reason that they have joined a buying club). While club members do not typically possess great technical expertise with computers, they are usually familiar with the Internet and e-mail. Of critical importance to club members is the ability to quickly and easily finalize whatever arrangements are necessary to conclude purchases of products for their families as they are purchasing higher quality products at better prices.
Although computers, e-mail and the Internet have assisted buying clubs, the growth of buying clubs has been hindered by a number of formidable challenges. As a result, buying clubs conventionally transact only a fraction of one percent of all consumer purchases. Based on the relatively small level of acceptance of buying clubs, despite their cost benefits and potentially broad market application, it is clear that an efficient and effective system to meet club member needs with a minimum of difficulty and effort does not yet exist. Reference is made to the '097 patent application describing in further detail additional logistical, financial, and operational requirements of buying clubs which description is herein incorporated by reference.
To establish and operate a buying club, the first step each buying club must undertake is to define what kinds of products the club wishes to purchase, and then to locate and form purchasing relationships with one or more appropriate suppliers. It is not easy to locate suppliers and suppliers are often located by word of mouth as even internet based keyword searches often fail to identify suitable suppliers. There is no system that provides a central registry to enable contact between buying clubs and suppliers that conveys to buyers what products or types of products are available from suppliers within a given geographic area. Even after finding a supplier, clubs may purchase from multiple suppliers, practicing selective sourcing based on the need for a diversity of products or better pricing, service, and/or availability of products from one supplier versus another supplier. Although members of clubs will purchase a variety of products as diverse as meats, produce, cleaning supplies, groceries and other consumables, as noted there is no central facility that provides information as to which suppliers will supply products by geographic area to buying clubs, and also what kinds of products suppliers will provide to buying clubs. Furthermore, persons interested in forming a buying club also do not have ready access to critical information such as product availability, seasonality restrictions, delivery times or conditions, minimum dollar order requirements, or other restrictions that are specific to receiving products or services from suppliers to buying clubs. In addition, there is no web site where a buying club may register themselves with suppliers should the buying club meet supplier requirements and desire to purchase products from them.
A further and very difficult complication results from the diverse product data structures under which suppliers sell products. Suppliers range from those who supply as few as 1 to 10 products (such as single product line suppliers like poultry producers or vendors of a single fruit such as apples) to full line distributors who supply up to 5,000 to 20,000 products. Suppliers sometimes provide printed catalogues or may allow viewing of product lists over the Internet. However, rarely are products able to be ordered directly over the Internet, and in any event catalogues are prepared by the individual suppliers and contain widely diverse product data structures. Since buying clubs are interested in sourcing from multiple suppliers and in optimizing their purchases, there exists a need to display suppliers and product catalogues in a consistent means for buying clubs so members are not required to master diverse product data structures.
A further need arises for consistent data structures so that optimizations may be calculated to enable placement of valid orders with suppliers. The need for optimization (and the pre-cursor step of aggregation) to place valid orders is based on the fact that whereas buyers typically wish to purchase units of a product, suppliers often only sell some products in predefined and relatively large number of unit increments (such as cases) for efficiency purposes. Therefore, although some products are available in single unit quantities, many suppliers often require customers (whether buying clubs or retailers) to purchase sufficient quantities of each product to meet a specific case quantity. Such case quantity sales include a number of units in a case, such as 6, 10, or some other number of units of the product for each case. Products may also be sold in different formats besides simply being available by the case or by the unit which can necessitate additional order processing and recordkeeping challenges.
As is generally well known, a Stock Keeping Unit (SKU) is, or refers to, a multi-digit number associated with a product for inventory purposes. By way of example, an SKU numbered 33445 for Quick Rolled Organic Oats may be sold in each variety of units per case of 5#, 10#, 25#, and 50# increments (wherein the “#” symbol is used herein to designate a pound or pounds), thereby effectively having four different case quantities for that single SKU from that supplier. Such a single SKU may be viewed by the buyer as four different products based on whether the buyer wishes to purchase in one or more 5#, 10#, 25#, or 50# increments. Another supplier may list those same products with the same weight divisions, but instead of listing them under a single SKU, they might list them by 4 different SKU numbers. For example, using the above Quick Rolled Organic Oats just cited, they might be sold as SKU 33421 for 5#, 33422 for 10#, 33423 for 25#, and 33424 for 50#. An additional data structure occurs when price breaks are offered based on purchases of 1-4 units at $5.00 each, 5-8 units at $4.50 each, and 9-12 units at $4.00 each. As is disclosed in the '097 patent application, it is of critical importance to buying club members that appropriate quantities be achieved for the buying clubs so that orders may be placed on behalf of all members for the buying club, and that members will be able to aggregate and optimize their orders. Accordingly, a system and method is needed so that such diverse product data structures can be included in the ordering process for buying club members.
For the purpose of discussion, the foregoing information associated with placing an order for a product, such as a SKU number (e.g., 33455), a product description (e.g., Nature's Peanut Butter), units per case (e.g., 12), unit label (e.g., 15 oz. jar), price per case (e.g., $25.00), and the like, shall be referred to herein as “quantitative” information.
In addition to quantitative information, members of buying clubs often desire additional information about products, referred to herein as “qualitative” information, such as a product's ingredients, nutritional information (e.g., serving sizes, calories, fat grams and the like), packaging information, an expanded product description, key characteristics (e.g., organic, genetically modified, kosher, and the like), an image of the product, and the like. Qualitative information may also include other intangibles relevant to the selection decision such as, for example, the type of workforce employed by a manufacturer (e.g., local versus international), wage levels paid to workers (e.g., below or above living wage levels), the ownership structure of a company (e.g., small family-owned versus large public company), methods of production (e.g., sustainable vs. non-sustainable), specific countries of origin of the product or the ingredients to the product, and the like.
There is, however, a general lack of product qualitative information from suppliers in catalogues, which is information that many buying club members would value. Many suppliers do not even offer such information in catalogues or, if they do, such information is typically incomplete. Conventionally, each supplier maintains their own catalogue in their own design with marked variations in format and completeness.
Not only is there a general lack of product qualitative information in suppliers' catalogues, but moreover, most of the foregoing qualitative information is not readily available to, or stored by, distributors. Even if it were, for distributors to maintain such qualitative information in a Master Catalogue for all products that they carry, (which could be up to 15,000 or even more) and for each manufacturer (which could be hundreds), would be a very large burden. Distributors generally carry such large numbers of products that providing such information for all products, particularly when such information would need to be sourced from dozens or hundreds of manufacturers or growers, would become a very resource-intensive task.
Similarly for manufacturers and producers to update all their product outlets (which also could range in the hundreds or thousands) would be a very large burden as well. Producers and manufacturers typically sell products through a wide variety of outlets comprising hundreds of customers which may include distributors, retailers, or direct customers (consumers). Therefore, a system is needed so that such qualitative information can easily and properly be included in the catalogue that is accessed by members of buying clubs.
There are still further limitations to the information conveyed by suppliers for buying clubs in the area of ordering. Suppliers will often set specials prices which are products discounted for sale over certain time periods, or until they are sold out in the case of discontinued products. However, there is a marked lack of uniformity and access to information in the area of specials prices for members while they are placing their orders. For example, some suppliers offer special prices on products based on orders received by a certain date (e.g., from July 1 to July 31). Another supplier may offer specials based on the date orders are shipped. Furthermore, no supplier to buying clubs offers immediate access and notification of specials to members at the same moment and in the same ordering screens as where members are placing their orders for products. Additional product attributes that are of interest to members while placing orders relate to the extent to which a product's price is discounted, whether it is being discontinued, and whether a product is being superseded by a new improved product. Members are often highly interested in being shown new products that are being offered when such products are available while they are placing their orders.
A further limitation of conventional systems is that members, when placing orders, are not informed if products are in or out of stock and/or when products may be in stock in the future. There is also no means of storing a back order for such a product during the on-line ordering process, nor is there any means for members of buying clubs to obtain such information from suppliers on-line. A telephone call or another means of accessing such information would be required, but this is impractical and inconvenient as buying club members often prefer to place orders after business hours when family related responsibilities subside.
A further constraint of existing systems is that a member placing orders for products from a supplier's catalogue may also be interested in purchasing product stored in the inventory of a buying club. However, members are not available to view and order the inventory of the club concurrently with their ordering from the supplier. And furthermore members are not able to know if inventory would in fact be available, ie have other orders placed for inventory caused such inventory to be allocated elsewhere? It is thus a major detriment to the club when such inventory is not automatically allocated to members who have placed orders for the same product from the supplier.
An additional constraint exists when the club itself may be interested or willing to supplement member orders to enable a supplier order to be submitted that otherwise would not meet supplier quantity requirements. Currently, such functions can only occur by means of intensive communications typically occurring late in the ordering process when such coordinating is even attempted.
An additional constraint of conventional systems is that it is highly inefficient to provide customizable pricing in the catalogue to customers, and thus suppliers tend to provide a “one size fits all” single set of prices for all customers regardless of the attractiveness of the customer or the supplier's costs that are associated with servicing the customer.
Further needs for suppliers are logistics and transportation planning and communications functions for buying clubs. Suppliers that deliver to buying clubs remotely establish route systems and drop points (also known as delivery points) around which schedules for order cutoffs and deliveries are set. It is not easy for suppliers to manage and communicate to buyers the appropriate truck route, delivery point (also referred to as drop point), and schedule changes or to update members as to exactly which supplier order cutoffs apply while orders are placed by different modes. This is made even more complex when multiple truck routes and delivery points may occur within a given geographic locale. As one example there may be one cutoff for a fax order, another for a telephone order, and a third that is based on mailing in an order, indicating that suppliers may not be using a common system for processing orders but have different systems that apply based on how the order is being received. Furthermore a supplier's ordering system and shipping systems are typically handled by different departments and are not integrated between each department and the buying club customer. Thus, while placing orders, clubs are not automatically provided with the delivery point, truck route, supplier order cutoff and delivery date information, but must search and obtain such information from other sources, typically a paper catalogue or a content only web page.
Additionally, suppliers have different minimum dollar order amount requirements for placement of an order. For example, a supplier may require a minimum order of $1,000 but vary this if a club is situated on an existing route, whereupon the minimum amount is only $500. Another supplier may set a $350 minimum order for a buying club. Still another may set a minimum order of $100 for produce and a minimum total order of $750. The minimum required dollar amounts are not monitored as part of the member's online ordering process to indicate whether or not the buying club has achieved the supplier minimum amount or not. In addition, a supplier may require other information such as one or more contact names or phone numbers to coordinate ordering or delivery of the products with the buying club.
There are a number of occasions where a product shipment that is delivered to a club has a discrepancy between what was ordered and what has been shipped or charged. Conventionally, members of clubs must fill out paperwork to indicate such problems, which are referred to as credits, or product credits. Members are typically required to complete this paperwork and fax it or otherwise have it delivered to the supplier within a relatively narrow time period. This is a time-consuming, tedious, and error-prone means of handling product credits, many of which originated from errors or omissions on the part of the supplier. A more efficient and easy means of processing these credits is strongly needed.
Another limitation of existing supplier offerings for buying clubs is the inability for manufacturers or other suppliers to offer electronic coupons to buying club members while they are purchasing the supplier's products. A further limitation is the lack of ability of suppliers to advertise products to buying clubs while members are placing orders via the electronic catalogue.
Without easy access to each supplier's ordering requirements and methods, and an easy ability to present and process product offerings, product availability, product pricing, and logistical and service arrangements offered by suppliers, buying clubs are required to undertake tedious activities of searching for, compiling, and organizing this information for each supplier. Given the daily activity levels and personal or family commitments of most club members, efforts to overcome the various limitations described herein fall well outside what is practical for club members.
Therefore, what is needed is a method and system for enabling members of buying clubs to place orders, which are aggregated, optimized, allocated and priced for the member and the club with a minimum of difficulty and effort so as to overcome drawbacks of existing systems.